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SEMESTER SPRING 2024

MICROECONOMICS (ECO402)
ASSIGNMENT
DUE DATE: MAY 07, 2024
MARKS: 10
ASSIGNMENT:
The Case:
In recent years, the real estate market in Pakistan has faced significant challenges, leading
to a noticeable decline. Several factors have contributed to this downturn, including
economic instability, political uncertainty, changes in government policies, a decrease in
consumers’ income, and the impact of the COVID-19 pandemic. These factors have
collectively led to decreased demand for properties, a slowdown in construction activity,
and a decrease in property prices. Suppose the demand and supply equations of
residential property of a newly established housing society are as follows:

The demand for residential property:

Qd=700,000−5P

The supply of residential property:

Qs=100,000+11P

Where:

Qd = Quantity demanded of residential property (number of plots)

P = Price per Marla (in Pakistani Rupees)

Qs = Quantity supplied of residential property (number of plots)

Requirements:

I. Using demand and supply equations, calculate the equilibrium price and quantity
of residential property of a newly established housing society.
II. Graphically illustrate the impact of an increase in consumers’ income on the
demand curve, equilibrium price, and equilibrium quantity of residential property.

III. Only for this part, consider the hypothetical data of quantity supplied of
residential property of a newly established housing society at given market prices
in the table below:

Price of Quantity
residential supplied
property per (number of
Marla (in residential
rupees) plots)

35,000 95,000

40,000 105,000

Using the data in the table, calculate the price elasticity of supply of residential property
when the price increases from Rs. 35,000 to Rs. 40,000. Also, interpret the result.

(Marks = 3+2+5)

IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome
uploading difficulties. This extra time should only be used to meet the
emergencies and above mentioned due dates should always be treated as final
to avoid any inconvenience.

OTHER IMPORTANT INSTRUCTIONS:


DEADLINE:
 Make sure to upload the solution file before the due date on VULMS.
 Any submission made via email after the due date will not be accepted.

FORMATTING GUIDELINES:
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 It is advised to compose your document in MS-Word format.
 You may also compose your assignment in Open Office format.
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RULES FOR MARKING


Please note that your assignment will not be graded or graded as Zero (0), if:
 It is submitted after the due date.
 The file you uploaded does not open or is corrupt.
 It is in any format other than MS-Word or Open Office; e.g. Excel,
PowerPoint, PDF etc.

 It is cheated or copied from other students, internet, books, journals etc.

Note related to load shedding: Please be proactive

Dear students!

As you know that Pre Mid‐Term semester activities have started


and load shedding problem is also prevailing in our country.
Keeping in view the fact, you all are advised to post your activities
as early as possible without waiting for the due date. For your
convenience; activity schedule has already been uploaded on
VULMS for the current semester, therefore no excuse will be
entertained after due date of assignments, quizzes or GDBs.

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